is not required to discharge any obligation placed on the person as a taxable person, so far as the obligation relates to relevant 40supplies.

(2)The reference in sub-paragraph (1) to an obligation placed on the person as a taxable person is to an obligation—

(a)to which the person is subject under or by virtue of this Act, and

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(b)to which the person would not be subject if the person were neither registered nor required to be registered under this Act.

(3)A supply made by a participant in a non-UK special scheme is a 5“relevant supply” if—

(a)the value of the supply must be accounted for in a return required to be made by the participant under the non-UK special scheme, and

(b)the supply is treated as made in the United Kingdom.

(4)10The Commissioners may by regulations specify cases in relation to which sub-paragraph (1) is not to apply.

(5)In section 25(2) (deduction of input tax from output tax by taxable person) the reference to output tax that is due from the taxable person does not include any VAT that the taxable person is liable 15under a non-UK special scheme to pay to the tax authorities for the administering member State.

Value of supplies to connected persons

18In paragraph 1 of Schedule 6 (valuation: supply to connected person at less than market value) the reference to a supply made 20by a taxable person is to be read as including a supply of scheme services that is made by a participant in a non-UK special scheme (and is treated as made in the United Kingdom).

Refund of VAT on supplies of goods and services supplied to scheme participant

19The power of the Commissioners to make regulations under 25section 39 (repayment of VAT to those in business overseas) includes power to make provision for giving effect to the second sentence of Article 369j of Directive 2006/112/EC (which provides for VAT on certain supplies to participants in special accounting schemes to be refunded in accordance with Directive 2008/9/EC).

30Assessments: general modifications of section 73

20(1)For the purposes of this Schedule, section 73 (assessments: incorrect returns etc) is to be read as if—

(a)the reference in subsection (1) of that section to returns required under this Act included relevant non-UK returns, 35and

(b)references in that section to a prescribed accounting period included a tax period.

(2)See also the modifications in paragraph 21.

(3)In this Schedule “relevant non-UK return” means a non-UK return 40(see paragraph 38(1)) that is required to be made (wholly or partly) in respect of supplies of scheme services that are treated as made in the United Kingdom.

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Assessment in connection with increase in consideration

21(1)Sub-paragraphs (2) to (4) make modifications of sections 73 and 76 which—

(a)have effect for the purposes of this Schedule, and

(b)5are in addition to any other modifications of those sections made by this Schedule.

(2)Section 73 has effect as if the following were inserted after subsection (3) of that section—

“(3A)Where a person has failed to make an amendment or notification 10that the person is required to make under paragraph 31 of Schedule 3BA in respect of an increase in the consideration for a UK supply (as defined in paragraph 31(7)), the Commissioners may assess the amount of VAT due from the person as a result of the increase to the best of their judgement and notify it to the 15person.

(3B)An assessment under subsection (3A)—

(a)is of VAT due for the tax period mentioned in paragraph 31(1)(a) of Schedule 3BA;

(b)must be made within the time limits provided for in 20section 77, and must not be made after the later of—

(i)2 years after the end of the tax period referred to in paragraph 31(1)(a);

(ii)one year after evidence of facts sufficient in the opinion of the Commissioners to justify making the 25assessment comes to their knowledge.

(3C)Subject to section 77, where further evidence such as is mentioned in subsection (3B)(b)(ii) comes to the Commissioners’ knowledge after they have made an assessment under subsection (3A), another assessment may be made under that subsection, in 30addition to any earlier assessment.”

(3)The reference in section 73(9) to subsection (1) of that section is taken to include a reference to section 73(3A) (as inserted by sub-paragraph (2)).

(4)Section 76 (assessment of amounts due by way of interest etc) is to 35be read as if the reference in subsection (5) of that section to section 73(1) included a reference to section 73(3A) (as inserted by sub-paragraph (2)).

Assessments: consequential modifications

22References to prescribed accounting periods in the following 40provisions are to be read in accordance with the modifications made by paragraphs 20 and 21—

(a)section 74 (interest on VAT recovered or recoverable by assessment);

(b)section 76 (assessment of amounts due by way of penalty, 45interest or surcharge);

(c)section 77 (assessment: time limits).

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Deemed amendments of relevant non-UK returns

23(1)Where a person who has made a relevant non-UK return makes a claim under paragraph 29(7)(b) (overpayments) in relation to an error in the return, the relevant non-UK return is taken for the 5purposes of this Act to have been amended by the information in the claim.

(2)Where a person who has made a relevant non-UK return gives the Commissioners a notice relating to the return under paragraph 31(2)(b) (increase or decrease in consideration), the relevant non-10UK return is taken for the purposes of this Act to have been amended by that information.

(3)Where (in a case not falling within sub-paragraph (1) or (2)) a person who has made a relevant non-UK return notifies the Commissioners (after the expiry of the period during which the 15non-UK return may be amended under Article 61 of the Implementing Regulation) of a change that needs to be made to the return to correct an error, or rectify an omission, in it, the relevant non-UK return is taken for the purposes of this Act to have been amended by that information.

(4)20The Commissioners may by regulations—

(a)specify within what period and in what form and manner notice is to be given under sub-paragraph (3);

(b)require notices to be supported by documentary evidence described in the regulations.

25Interest on VAT: “reckonable date”

24(1)Sub-paragraph (2) states the “reckonable date” for the purposes of section 74(1) and (2) for any case where an amount carrying interest under that section—

(a)is an amount assessed under section 73(2) (refunds etc) in 30reliance on paragraph 20, or that could have been so assessed, and

(b)was correctly paid or credited to the person, but would not have been paid or credited to the person had the facts been as they later turn out to be.

(2)35The “reckonable date” is the first day after the end of the tax period in which the events occurred as a result of which the Commissioners were authorised to make the assessment (that was or could have been made) under section 73(2).

(3)Sub-paragraph (4) states the “reckonable date” for any other case 40where an amount carrying interest under section 74 is assessed under section 74(1) or (2) in reliance on paragraph 20, or could have been so assessed.

(4)The “reckonable date” is taken to be the latest date by which a non-UK return was required to be made for the tax period to which the 45amount assessed relates.

(5)Where section 74(1) or (2) (interest on VAT recovered or recoverable by assessment) applies in relation to an amount

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assessed under section 73(3A) (as inserted by paragraph 21(2)), the “reckonable date” for the purposes of section 74(1) or (2) is taken to be the day after the end of the tax period referred to in paragraph 31(2).

5Default surcharge: notice of special surcharge period

25(1)A person who is required to make a relevant non-UK return for a tax period is regarded for the purposes of this paragraph and paragraph 26 as being in default in respect of that period if either—

(a)10conditions 1A and 2A are met, or

(b)conditions 1B and 2B are met;

(but see also paragraph 27).

(2)For the purposes of sub-paragraph (1)(a)—

(a)condition 1A is that the tax authorities for the 15administering member State have not received the return by the deadline for submitting it;

(b)condition 2A is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the obligation to submit 20the return.

(3)For the purposes of sub-paragraph (1)(b)—

(a)condition 1B is that, by the deadline for submitting the return, the tax authorities for the administering member State have received the return but have not received the 25amount of VAT shown on the return as payable by the person in respect of the tax period;

(b)condition 2B is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the VAT outstanding.

(4)30The Commissioners may serve on a person who is in default in respect of a tax period a notice (a “special surcharge liability notice”) specifying a period—

(a)ending on the first anniversary of the last day of that tax period, and

(b)35beginning on the date of the notice.

(5)A period specified under sub-paragraph (4) is a “special surcharge period”.

(6)If a special surcharge liability notice is served in respect of a tax period which ends at or before the end of an existing special 40surcharge period, the special surcharge period specified in that notice must be expressed as a continuation of the existing special surcharge period (so that the existing period and its extension are regarded as a single special surcharge period).

Further default after service of notice

26(1)45If a person on whom a special surcharge liability notice has been served—

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(a)is in default in respect of a tax period ending within the special surcharge period specified in (or extended by) that notice, and

(b)has outstanding special scheme VAT for that tax period,

5the person is to be liable to a surcharge of the amount given by sub-paragraph (2).

(3)The specified percentage depends on whether the tax period is the first, second or third etc in the default period in respect of which the person is in default and has outstanding special scheme VAT, and is—

(a)15for the first such tax period, 2%;

(b)for the second such tax period, 5%;

(c)for the third such tax period, 10%;

(d)for each such tax period after the third, 15%.

(4)“Special scheme VAT”, in relation to a person, means VAT that the 20person is liable to pay to the tax authorities for the administering member State under a non-UK special scheme in respect of supplies of scheme services treated as made in the United Kingdom.

(5)A person has “outstanding special scheme VAT” for a tax period 25if some or all of the special scheme VAT for which the person is liable in respect of that period has not been paid by the deadline for the person to submit a non-UK return for that period (and the amount unpaid is referred to in sub-paragraph (2)(b) as “the person’s outstanding special scheme VAT” for the tax period).

30Default surcharge: exceptions for reasonable excuse etc

27(1)A person who would otherwise have been liable to a surcharge under paragraph 26(1) is not to be liable to the surcharge if the person satisfies the Commissioners or, on appeal, the tribunal that, in the case of a default which is material to the surcharge—

(a)35the non-UK return or, as the case may be, the VAT shown on that return, was despatched at such a time and in such manner that it was reasonable to expect that it would be received by the tax authorities for the administering member State within the appropriate time limit, or

(b)40there is a reasonable excuse for the return or the VAT not having been so despatched.

(2)Where sub-paragraph (1) applies to a person—

(a)the person is treated as not having been in default in respect of the tax period in question, and

(b)45accordingly, any special surcharge liability notice the service of which depended on that default is regarded as not having been served.